Gas Wars Part Two in Eastern Europe

Cold War Redux is off to an early start this year. Gazprom, Russia’s state within a state natural gas monopoly, shut the taps to Ukraine this morning after talks broke down over 2009 delivery prices. Z novym rokom, Ukraine!

When Russia cut supplies to Ukraine two years ago in a similar pricing dispute, it caused tremendous consternation in European capitals. Western Europe depends heavily on energy supplies from Russia — and Ukraine is a key transit route for gas. Forget nukes. Russia has found that energy can be a much more effective weapon.

Bloomberg has an excellent roundup of the situation. The takeaway? "The repeat of an energy standoff between the former Soviet neighbors risks further souring Russia’s ties with the West, months after its war with U.S. ally Georgia," the article notes.

Gleb Pavlovsky, Russia’s Karl Rove, blamed the Ukrainians for trying to start an "artificial crisis" that would worsen relations between Russia and the European Union. "Ukraine deliberately creates the crisis, blackmailing Russia," he told Interfax.

Nonetheless, Russia is in a somewhat weaker position than it was two years ago. European supplies have diversified, and the once-mighty Gazprom is reeling from a drop in global energy prices.